Progressive Insurance uses information systems primarily to reduce accidents

Question

BlackTom AI · Accepted Answer

Progressive deploys telematics and analytics primarily to price and manage risk, not chiefly to reduce accidents.

1. Relevant knowledge points and concepts
- Insurance companies use information systems for underwriting (assessing risk), pricing (setting premiums), claims processing, customer service, and fraud detection.
- Telematics (vehicle data collection, e.g., Progressive’s Snapshot) records driving behaviors (speed, braking, time-of-day) and is used for usage-based insurance.
- Incentives (discounts) can influence driver behavior, but the insurer’s primary objective with data-driven programs is accurate risk classification and loss cost management.

2. Step-by-step reasoning
- Identify the claim: “Progressive uses information systems primarily to reduce accidents.” Note the word “primarily” — it asks for the main purpose.
- List Progressive’s documented uses of information systems: risk-based pricing, customer acquisition/retention, automated claims handling, fraud detection, and telematics-based underwriting.
- Examine telematics: While Snapshot gathers behavior data that can nudge safer driving via discounts, the collected data’s main operational value is to more precisely estimate each driver’s expected loss and set premiums accordingly.
- Compare priorities: For an insurer, reducing claim frequency/severity is desirable, but the primary corporate function is accurate risk assessment and profitable pricing; accident reduction is a secondary benefit or incentive mechanism, not the principal organizational purpose of the systems.

3. Intermediate steps/details shown
- Snapshot provides driving scores → those scores inform individual premium calculations (underwriting/pricing).
- Discounts for good scores create an incentive to drive safer → possible reduction in accidents (a downstream effect).
- Core systems also automate claims and detect fraud → cost reduction and efficiency, unrelated to directly preventing accidents.

4. Why the correct answer is correct
Because Progressive’s information systems are primarily designed to assess and price risk, improve operational efficiency, and manage claims — with accident reduction being an indirect or secondary benefit rather than the main objective.

5. Why the other option is incorrect
The “True” choice implies accident reduction is the principal goal; that overstates the insurer’s intent. While safety incentives exist, they serve the main goals of risk-based pricing and cost control.

6. Conclusion confirming the final answer
Therefore the correct answer is False, matching the provided answer.

Progressive Insurance uses information systems primarily to reduce accidentsTrue/False

Similar Questions

The manager of Bean There, Done That implements an ERP dashboard showing average customer wait time, gross profit margin, and inventory turnover rate. By using this dashboard to monitor real-time data, the manager is primarily leveraging the ERP system to achieve what?

Question at position 18 Which of these is a major reason ERP projects often fail?Poor planning and lack of change managementLow implementation costs for wider functionalityOvertraining of users for new systemsOverestimating user resistance due to fancy interfacesClear my selection

Question at position 6 Which of these is a major reason ERP projects often fail?Overtraining of users for new systemsPoor planning and lack of change managementLow implementation costs for wider functionalityOverestimating user resistance due to fancy interfacesClear my selection

________ is an intangible benefit of information systems.

Do electronic Accounting Information Systems pose more of a threat to customer privacy than paper-based systems?

An Information System is a subset of the Information Technology Infrastructure.

The Operational level of the information systems model focuses on making business processes more efficient and the collection of information needed for making better, faster decisions

Before implementing new information systems at Hard Rock, they were experiencing major problems of availability, efficiency and poor quality of information at all levels of their organization

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler